How to Get Out of Debt Using a Trust Deed

A protected trust deed is the equivalent of the IVA (Individual Voluntary Arrangement) in Scotland. It is a legally governed procedure where you can begin to repay you debt over a specified period of time. Most of the monthly payments will be based on what you can afford and after the period of your Trust Deed has ended, any remaining debt is written off. The popularity of trust deeds are increasing all the time due to how effective they are at eliminating debt problems. A trust deed is a fast way of getting out of debt with a minimal amount of stress. Your creditors will want you to deal with debt the long and hard way, so they can get back as close to 100% of what you owe them. A trust deed eliminates the demoralising and overwhelming process of getting out of debt slowly, with affordable payment periods.

Write off some of the debt

A trust deed will be able to help you write off up to 70% of what you owe, and help you to get out of debt faster. Many debtors struggle with interest rates and charges that steadily pile up against them. With a trust deed, your creditors won’t get a substantial proportion of the interest and charges they have heaped on your original borrowings, and they won’t be able to take any further actions against you. A trust deed also costs less to administer than a sequestration, which means a trust deed will avoid adding to your debt problem.

Short repayment period

A trust deed usually takes around 3-4 years to complete compared to a debt management plan. These other plans usually take more than five years to complete entirely. A trust deed aims to ensure that you are debt free, faster. After the repayment period has ended, any remaining debts that are protected under your trust deed will effectively be written off. This will help to ensure that when your trust deed is over you will have a better chance of staying out of debt.

Trustee

If you choose to get out of debt using a trust deed, you will have to have the necessary paperwork signed and your trustee will try to protect your trust deed. With a trustee, you have an experienced professional on your side that will have an in-depth knowledge of finance and law. The trustee will be able to offer advice on how to deal with unexpected financial events and how to keep out of debt. They are an invaluable tool when it comes to using a trust deed for getting out of debt.

Creditor Approval

When you apply for the trust deed, your creditors will be given five weeks to object to the offer of how much money you can pay them each month for three years. If they fail to accept, or reject the offer, or if less than half of them object, you can still start making the proposed payments. Protected status will only be refused when creditors representing a majority in number or at least 33% of the total debt object in writing. After your trust deed is protected, your creditors will no longer be able to contact you directly, making it much easier for you to get out of debt without feeling harassed.

Financial skills

Trust deeds teach important money management skills, which means you will be able to come much more financially aware after your trust deed is completed. During a trust deed your spending will be tightly controlled and monitored by your trustee, which will help you to learn valuable budgeting and money management skills that will stay with you for life.

If you need any advice about trust deeds, debt, or money management skills – contact Council Tax Advisors today. We are a community interest company who are committed providing help and support to those who are struggling with debt.

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